Ivanhoe Australia (IVA)

Ivanhoe Australia
announced a capital raising of $180m via a placement of shares at $1.39 per share, a 6.7 per cent discount to the last closing price. The funds will be used to advance the Osborne and Merlin projects and for ongoing exploration and evaluation around the company’s tenements, says UBS.

Project updates for Osborne and Merlin were also provided showing higher capital expenditure and operating costs than previously envisaged, and the broker estimates that the company still requires an additional $120m to complete the Merlin Mine development before first production in late 2013.

The broker has maintained its “buy" rating on the stock with a price target of $2.20, as it believes it is a long-term value play, and exploration should also continue to deliver positive results across the tenement package.

JPMorgan is a little more cautious on the stock given the funding gap, and says the company is likely to raise more funds through debt facilities and asset sales, but says a further equity raising cannot be ruled out.